Nigeria still is highest gas flaring country in the world

Aug 03, 2004 02:00 AM

Despite efforts being made by the Federal Government in the past few years, Nigeria is still ranked the world's
highest gas flaring country with 42.6 % of its total annual gas production, about 799 bn cfpy of gas presently being
flared.
In a related development, the Federal Government says it has between 1999 and 2003, spent over $ 793.7 mm in
rehabilitation of Nigeria's three refineries, pipelines and depots. A breakdown of the expenditure is as follows:
refineries $ 485,448,688 while that of pipelines and depots was $ 254,364,232. However, the refineries presently have
a total refining capacity of 218,000 bpd of oil against an installed capacity of 445,000 bpd.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engr. Funso Kupolokun, who
disclosed this stated that the nation's flared gas constitutes about 20 % of world's total flared gas. This quantity
of gas wasted annually, according to the group managing director, is capable of supplying gas for power generation
and other gas utilizing projects to the entire sub-Saharan Africa in a year.
Kupolokun noted that Nigeria's current gas reserves stand at 187 tcf. Out of this, the country produces, 1,879 bn
cfpy while only 1,080 bn cfpy is utilized. Therefore, one of the major challenges facing the government now is how to
optimally utilize and monetise the wasted resource, as well as meet its 2008 zero gas flaring target, he added.

Some of the ongoing gas projects in the country such as the NLNG project, Escravos-Lagos Gas Pipelines, the West
African Gas Pipeline (WAGP), Gas-to-Liquid project, domestic gas utilization projects being undertaken in conjunction
with private sector, and the gas powered independent power plants projects.
Government has equally directed all the Production Sharing Contract (PSC) Agreements to have a clause in such
agreements that boost gas utilization. There are also other fiscal incentives to encourage operators to show
commitment to zero gas-flares production. For example, Kupolokun stated that domestic gas is highly subsidized and is
being sold at a price below cost of supply. Government, he said, subsidizes gas supply to the power sector to the
tune of between $ 50 and 90 mm about N 6.5 and N 11.7 bn annually, he said.

To further boost investment in gas, the government is planning to integrate roles government institutions such as
NNPC and the Nigerian Gas Company and unbundle it to engender competition. The whole downstream gas market is not
competitive, it said.
Other measures being undertaken by government to boost value-added oil and gas industry in Nigeria, Kupolokun
explained, is the drive to appreciably increase both human and material local content in the industry. The government
presently encourages local production of bentonite and baryte, among others used in oil production. The consumption
of these two local materials according to NNPC boss, has risen to 30 and 150 tpy.

In addition, the government is making moves to domesticate reservoir management and seismic processing projects, and
breaking of major industry projects into small manageable packages to accommodate indigenous contractors.
Nigeria's exploration and production company, the Nigerian Petroleum Development Company (NPDC) is also being
strengthened for greater challenges by improving technical capability through joint venture arrangements with major
operators with a view to competing favourably with the major in future as well as building production capacity.

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